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Bernanke's dovish stand spurs rally

Stocks are rising today after Federal Reserve Chairman Ben Bernanke stunned investors with dovish comments, apparently backtracking from remarks that triggered a selloff less than two months ago.

S&P 500 futures are up more than 1 percent, outpacing gains in Europe. Asia was also strong in the overnight session, led by China as the country's stocks draw buyers at long-term lows.

Citing low inflation, weak employment, and tight fiscal policy, Bernanke declared that "highly accommodative monetary policy for the foreseeable future is what's needed in the U.S. economy." The comments last night at an economic conference in Cambridge, Mass., appear to contradict the message he tried to send in late May, when the market thought that he was preparing to stop monetary easing. The S&P 500 fell sharply at the time as a result, though it has been rebounding the last three weeks.

Yesterday's comments are driving up the price of bonds and precious metals. Gold and silver are both adding about 3 percent and appear to be rebounding from long-term downtrends. The buying in Treasuries is also pushing yields lower, which could support housing and financial stocks.

Retailers will also be active today as several companies in the sector report same-store sales for June. The main economic release is weekly jobless claims at 8:30 a.m. ET, but the key catalyst will likely remain the reverberations of Bernanke's dovish remarks.

Copper is also gaining 3 percent, matching the gains in Shanghai overnight. Given the correlation between copper and emerging markets, that may indicate sentiment is brightening toward countries like China and Brazil.

Oil is failing to participate in the global rally, shedding about half a percent. U.S. dollar weakness is the main theme in foreign-exchange markets, with the euro, yen, Australian dollar and Canadian dollar all higher against the greenback. The yen is lower against other currencies, which reflects bullish sentiment.

In company-specific news, Apollo Group will likely be active after its University of Phoenix was re-accredited. Microsoft is expected to announce major organizational changes, which could impact trading in the software giant. Rockwell Medical is also up more than 20 percent after announcing that its kidney-drug candidate succeeded in a late-stage trial.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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